GMB Sees Off Bid By Pub Bosses To Increase Rent By 42%

1 Apr 2014

Claire Muldoon, a GMB tied tenant in the Patternmakers Arms, Duffield, refused to pay the extra money and, with the support of her union, has signed a new deal that is better that her existing one.

GMB rep Dave Mountford said: “It has been incredibly hard work with a fair amount of unpleasantness but this deal secures the future of the Pattenmakers Arms. Claire has taken a lot of stick but she has stuck to her guns and has now got a new deal that is better than her existing arrangement. This is an important result because it is a high-profile case but is by no means unique. The majority of publicans don’t know what they can achieve by fighting back because so many are unaware of their rights. Ultimately, the case of the Pattenmakers Arms shows what is going on in the industry and it isn’t just Enterprise Inns who are not following the guidelines.”

In late 2013 Claire whose five-year agreement was up in April 2014 was told that she has no automatic right to renewal. Her Regional Manager, Ashley Lovett offered her a new tenancy with a 42% increase in rent from £16,470 to £23,450. GMB wrote to Vince Cable highlighting the rent demand.  Local Conservative MP Pauline Latham raised the case in a Parliamentary Debate which Dr Cable described as “truly shocking”. There was a public meeting attended by more than 100 people. After that the MP presented a petition on behalf of the local residents to Dr Cable.

On the claim that Claire had no automatic right to renew the lease GMB checked out the legal position, the lease and the paperwork. GMB concluded that Sections 24 – 28 of the Landlord and Tenant Act applied and Claire had a right to renew her lease. The Patternmakers is one of 25,000 pubs owned by big property companies like Enterprise which are piled up with billions of pounds worth of debts. They are overcharging publicans for drinks – wet rent – as well trying to drive up rents – dry rents – in order to pay the interest charges.

In April 2013 Department for Business, Innovations and Skills published a draft statutory code for tied pubs for consultation which closed in June. There was an overwhelming and unprecedented response from tenants and the public supporting statutory regulation for a free market for products and fair rents. GMB is campaigning for Option 3 the “freedom option” in the statutory code. This offers tied tenants the ability to buy products from the open market and pay a fair market rent for the building.

Dave Mountford said: “On the wider we need Option 3 in the statutory code. This will offer tied tenants like Claire Muldoon the ability to buy products from the open market and pay a fair market rent for the building. Interest payments on the huge pubco debts have to be paid each week before the tenant pours a pint and regardless of whether s/he can make ends meet or not. That is why Enterprise was seeking a 42% increase in rents. To pay these sky-high rents a pint of lager is on average 80p per pint higher and ale is 65p per pint higher than justified by inflation and like for like changes in taxes since 1987. This is pricing pubs out of the market and they have closed in droves.

The common view that shareholders in the pubcos own a pub business is wrong. In fact the shareholders don’t own a pub business; they own a holding company which invests in and manages incomes from pubs – these are called pub securitisations. These securitisations are the infernal machine that is closing pubs across the country. It is the same infernal machine that drove Southern Cross care homes to the wall. GMB and others have campaigned for many years for Parliament to legislate to free pubs from this infernal machine before it destroys them all. This statutory code is likely to be our one chance to save local pubs. This campaign exposes the Orwellian world where the pubcos say that regulation to ensure a free market is “red tape”. What tosh!”